On 2 May 2024, the Commodity Futures Trading Commission's (CFTC) Technology Advisory Committee (Committee) released a report entitled Responsible AI in Financial Markets: Opportunities, Risks & Recommendations. The report discusses the impact and future implications of artificial intelligence (AI) on financial markets and further illustrates the CFTC's desire to oversee the AI space.
In the accompanying press release, Commissioner Goldsmith Romero highlighted the significance of the Committee's recommendations, acknowledging decades of AI use in financial markets and proposing that new challenges will arise with the development of generative AI. Importantly, the report proposes that the CFTC develop a sector-specific AI Risk Management Framework addressing AI-associated risks.
The Committee opined that, without proper industry engagement and regulatory guardrails, the use of AI could "erode public trust in financial markets." The report outlines potential risks associated with AI in financial markets such as the lack of transparency in AI decision processes, data handling errors, and the potential reinforcement of existing biases.
The report recommends that the CFTC host public roundtable discussions to foster a deeper understanding of AI's role in financial markets and develop an AI Risk Management Framework for CTFC-registered entities aligned with the National Institute of Standards and Technology's AI Risk Management Framework. This approach aims to enhance the transparency and reliability of AI systems in financial settings.
The report also calls for continued collaboration across federal agencies and stresses the importance of developing internal AI expertise within the CFTC. It advocates for responsible and transparent AI usage that adheres to ethical standards to ensure the stability and integrity of financial markets.
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